Family firms ‘backbone of economy’
Speaking at the inaugural family business conference organised by the John C Kelleher Family Business Centre at UCC, Prof Wrixon said greater effort in supporting family-owned enterprises, and encouraging their sustained development through harnessing the efforts of organisations like Enterprise Ireland is required.
Mr Wrixon said that historically family business has not had a very high profile in Ireland, with government policy and national investment emphasis on encouraging multinational involvement in the country.
“It is important that there is national recognition of the impact, both economic and social, of family-owned enterprises. I speak of the social importance of family-owned firms because research suggests that family-owned firms have strong social values, and take long-term perspectives on business decisions which often lead them to act in an ethical and community-oriented fashion, in some cases even at the expense of maximising profit.
“Family firm owners often see themselves in a stewardship role, and are anxious to hand on businesses that are responsible and reputable as well as financially successful to the next generation,” he said.
Mr Wrixon said it must be remembered that family-owned enterprises, big and small, form the backbone of the economy and as such deserve greater specialised attention, and more focus than they have received to date.
The Minister for Enterprise, Trade and Employment, Micheál Martin, said the well-being of family businesses is of central importance to the economic strength of the country.
“Family-run businesses provide a competitive advantage through sustained commitment to the firm and industry, and greater flexibility.
“They are the mainstay of indigenous business, spanning from small family-owned grocery stores and smoke free pubs to large organisations such as local success stories Thomas Crosbie Holdings and Musgrave.
“They feature in every sphere of industry from retail to engineering and yet historically, their special nature has received very little attention,” he said.
Mr Martin said industrial development agencies work with industry to help and assist family businesses get off the ground and to grow.
Mr Martin said the Enterprise Ireland’s advice on succession planning for family businesses and EI’s Mentor Programmes were examples of intensive one-on-one support structure for family-owned businesses.
The minister said international studies indicate that high levels of taxes such as estate tax, inheritance tax and gift tax can pose particular difficulties for family-owned businesses by hindering the process of succession and discourage business transfer to the next generation, making it difficult for family businesses to survive beyond the death of the founder.
“However, we have been very conscious of that risk in Ireland and we have a generous CAT Business Relief in place. Our actions in this area have been recognised and in 2004, Ireland was ranked a very commendable third, behind Luxembourg and the UK, in a survey benchmarking European tax and legal environments,” he added.
Mr Martin said the importance of professional management increases during this phase. It is important that the roles of family members in the business are clearly defined.
“Effective and acceptable processes are required for dealing with family issues that arise in the business.
“It is vital that those involved in running these businesses appreciate the importance of developing their management skills,” he said.
“The training and development assistance provided by the State agencies plays a major role in ensuring that our managers are equipped with the requisite skills to take their businesses forward,” the minister added.
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